Recently it was revealed that the UK’s £100bn creative industry is being undermined by late payments.
The Drum, the marketing industry news site, reported that around 48% of creative industry SMEs were paid late in 2018.
Late payments drastically affect the cashflow and financial health of companies. This is a challenging problem and a real danger for this industry, which is typically made up of smaller agencies and consultancies.
The Real Problems with Late Payments
Although a late payment may not be a problem for a blue chip company, it’s a big deal for a small agency.
Many SMEs will rely on these bigger clients - often as their main source of revenue – and are regularly expected to wait up to 90 days before their invoices are paid.
Although paid eventually, the delays can cause SMEs a lot of harm. They can stunt ambitious growth plans, block new deals and even end a company.
Late payments can cause a creative SME to run out of cash to pay for software licences, office and tech rents, the agency dog’s vet bills and even wages for talented creative professionals and freelancers.
Late payments cause gaping holes in cashflow and lack of working capital to keep working.
As you can see, it can happen even if an agency has fought hard to win new clients.
A domino effect on the UK economy
This is not just a problem for creative start-ups and SMEs.
As well as almost half of creative SMEs being affected by this late payment crisis, this can also cause serious problems for the UK economy.
The UK’s creative industries are worth over £100 billion to the UK, according to figures published by the Department for Digital, Culture, Media and Sports.
That figure affects millions of livelihoods, projects and businesses in other sectors too.
A common problem within the creative industry is the fear of losing clients when confronting them about late payments. This causes SMEs to fall into the trap of being stuck in a cashflow hole.
But there is a way out of this trap which is more flexible and accessible than a bank loan or overdraft.
Looking for funding with a human touch?
Skipton Business Finance has worked with many clients in the sector who have stabilised their cashflow with flexible working capital solutions.
SMEs are often held back by their lack of working capital. What they need as a cash injection that balances cashflow and removes the barrier to taking on new contracts or investing in new technology and talent.
Backed by and sharing the ethos of Skipton Building Society, Skipton Business Finance (SBF) provides accessible forms of working capital that are perfect for SMEs.
Our friendly teams across the UK support your business with finance facilities from as little as £25,000 to as large as £5m.
You will be assigned a dedicated relationship manager who sticks by you and understands your business. We look at the individual merits of a business as part of our underwriting criteria, taking potential sales figures and the whole context into consideration and not only credit scores.
If you would like a no-obligation FREE quote email email@example.com or use the quick and simple form on the right and we’ll call you back.